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Giffen?s Good: A case of mistaken identification

Author

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  • Brunt, Liam
Abstract
Giffen reported that, in the late nineteenth century, English wheat consumption rose when its price increased ? the first recorded ?Giffen good?. Using Giffen?s data, I explain how he reached his conclusion. I then show that his analysis was faulty: price elasticity of demand appears positive when the demand curve is incorrectly identified, but is significantly negative ? like any normal good ? when it is correctly identified. Since the pathological Giffen good case was actually just mistaken identification, it is no surprise that Giffen goods are impossible to find elsewhere. Popularization of the Giffen good stemmed from Marshall?s and Samuelson?s influential textbooks.

Suggested Citation

  • Brunt, Liam, 2013. "Giffen?s Good: A case of mistaken identification," CEPR Discussion Papers 9737, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:9737
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    More about this item

    Keywords

    Giffen good; Identification; Stationarity; Endogeneity;
    All these keywords.

    JEL classification:

    • B13 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - Neoclassical through 1925 (Austrian, Marshallian, Walrasian, Wicksellian)
    • B16 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - Quantitative and Mathematical
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis

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